Swan warns of 'unpopular' budget

Treasurer Wayne Swan has warned that next week's budget will be 'unpopular' and that hard decisions are needed to steer Australia through the economic downturn.

Economists expect the budget deficit to top $50 billion, just one year after Swan announced a $22 billion budget surplus, and speculation is mounting over what programs will be cut.

"There are hard choices and there will be decisions that will be taken which won't be popular," Mr Swan told ABC television.

"But the government will take the unpopular decisions in the interests of ... supporting jobs, stimulating our economy now (and) putting in place the long term investments for the future so we can maximise opportunities when the world economy recovers."

Prime Minister Kevin Rudd has also been playing down budget expectations but has said that long-promised increases to pensions and allowances for carers will be included in the budget.

"It costs a truckload to do it," Rudd said last month.

However, Families minister Jenny Macklin told News Limited newspapers last month that a rise for aged pensionrs and carers was guaranteed.

"We have always been clear, age pensioners, disability support pensioners, carers and veterans will get a pension rise in the May budget," Ms Macklin told the Australian in March.

Tax cuts promised for high income earners could be under threat as the government seeks to make up for the $115 billion revenue shortfall caused by the financial crisis.

Also potentially on the chopping block is the paid maternity leave scheme promised by the Rudd government in Septmeber last year.

After the Productivity Commission recommended 18 weeks of paid maternity leave for Australians, Mr Rudd said it was time to "bite the bullet" on the issue.

There is also speculation that the government will use the budget to unveil a third stimulus, although it is unlikely to take the form of another cash handout.

Opposition Leader Malcolm Turnbull has accused the government of indecision on the budget.

"This is a government whose economic policy is all over the shop," Mr Tunbull said. "They don't know whether they are tightening their belt or throwing their money around like Santa Claus on steroids. They have no coherent economic strategy."